Ewing couple gets 5 years for mortgage fraud

N.J. Office of the Attorney General
Joann Smith (left) and her boyfriend Wayne Betha (right) pleaded guilty Friday in Superior Court in Mercer County to theft by deception and failure to file tax returns. They each face between five and 10 years in state prison at sentencing, according to the plea deal

TRENTON — A Ewing couple was sentenced to five years in prison, for exploiting and deceiving vulnerable homeowners and large banking institutions, out of more than $1 million, through a two-year-long mortgage fraud scheme.

Joann Smith, 47, and her boyfriend Wayne Betha, 42, pleaded guilty in July to theft by deception and failure to file tax returns. According to the N.J. Office of the Attorney General, the couple ran a Trenton-based real estate firm and admitted they defrauded mortgage companies out of $641,800 and stole $600,000 from home sellers between August 2006 and February 2008.

The two defendants waived their right to a trial and opted for a plea agreement which found them guilty of two out of the 12 original counts listed on the indictment. During sentencing on Friday, Betha’s lawyer argued that the judge should consider the lax mortgage rules by banks, during the time his defendant operated the scheme, and should use that as a mitigating factor for sentencing.

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“Large financial institutions, at (that) time, were not paying attention to mortgages, and (were) inviting the collapse that they got. They were inviting the fraud,” said Betha’s defense attorney. “Also the individuals, these (victims), were in situations and they paid no attention to what was going on. (It takes) common sense to not be a victim of a crime.”

The couple, which used their firm, S&B Property Management and Maintenance LLC of Trenton deposited more than $600,000, from proceeds Smith received from the sale of 11 homes, into their personal accounts. The victims, according to reports, were suffering from severe financial problems, and could not pay their mortgages.

Proceeds from the sales were able to be diverted by telling the sellers and title companies that they owed expenses for property repairs that were never done. The couple also demanded consultant fees that the sellers had not authorized.

In addition, Smith and Betha provided false information in three of the home sales regarding the wages of the buyers on settlement forms submitted to the U.S. Department of Housing and Urban Development (HUD) and mortgage applications. As a result mortgage companies issued loans totaling $641,800 based on the false information.

Four of the homes sold were in Trenton, one in Ewing, two in Hamilton, two in Willingboro, one in Orange, and one in Camden, according to reports.

Lastly, the two failed to file corporate business tax returns with the state between 2005 and 2008. Smith failed to file personal tax returns during those years, and Betha did not file state personal income taxes in 2007.

“I’m kind of lost here your honor I heard everything (the prosecutor) said and everything my lawyer presented and I understand about the plea agreement and everything and even when I read the pre-sentencing agreement about what I did,” said Betha when addressing the court. “But a lot of people got their money back, so I don’t understand, it was never my intention to harm anybody or hurt anybody, I faked salaries, but (the victims) were going to lose their houses, I was trying to help,” he said with tears in his eyes.

When Smith was asked to address the judge, she seemed defiant, uncertain that she had done anything wrong or if in fact there were victims of the scheme. “Your honor we’ve been going through this case for four years, not one victim came forward to try to recoup their money back, not one person came forward try to get not even $10 back,” she said.

“No victim ever came forward, they never came to court, that’s what I feel if they’re saying I took all these people money, not one came forward.”

Deputy Attorney General Carpenter, who presided on behalf of the state, shared that victims, some who are still unable to obtain a mortgage due to a ruined credit rating as a result of the scheme, were ready, willing and able to come to court, if the case had gone to trial.

After hearing both pleas from the defendants, Judge Mark Flemming shared his own view of the amount of harm both larger financial institutions and the 10 homeowner victims have received due to the criminal actions of Betha and Smith. “Human victims of this scheme were seriously hurt by the defendants,” said Femming. “The defendants’ conduct here did cause serious harm, not physical harm, but personal and financial harm … and clearly banks were not acting as they should have acted in reviewing certain loans regarding real estate at that time.”

The two defendants received a five-year sentence for the theft by deception charge and three years for the failure to file tax returns, to run concurrently.